Monthly Archives: August 2022

10 PRACTICAL STEPS TO ENSURE YOUR MONEY IS WORKING HARD FOR YOU

In these uncertain times, it’s more important than ever to make sure your finances are in order. The Bank of England believes that a painful squeeze on our living standards, driven primarily by soaring energy prices, is set to intensify and will push the UK economy into recession later this year.

Making your finances recession-proof is all about taking practical steps to ensure your money is working hard for you. It is vital to be completely honest with yourself about your financial situation.

By conducting a thorough audit of your finances and gaining a comprehensive understanding of all your incomes and outgoings, this will show you exactly where your cash is going and, most importantly, help you identify problematic spending behaviour.

HERE ARE 10 TIPS TO HELP YOU RECESSION- PROOF YOUR FINANCES:

1. Make a budget and stick to it This will help you keep track of your spending and ensure that you’re not overspending.

2. Save, save, save! Try to put away as much money as you can into a savings account so that you have a cushion in case of tough times.

3. Invest in yourself Take the time to learn new skills or improve upon existing ones. This will make you more valuable in the job market if you need to make a job or career change.

4. Remove any unnecessary payments Look at your bank account and remove any pain-free direct debits. Consider if you’re currently paying for things you don’t really need, for example, subscriptions.

5. Time to switch Look at energy tariffs, home insurance, car insurance, broadband, TV package, mobile tariff – now might be a good time to switch.

6. Stay disciplined with your debt Make sure you’re making all of your payments on time and in full. This will help you avoid costly late fees and keep your credit in good shape.

7. Pay off high interest Prioritise any high- interest debt, such as credit card debt, freeing up more money in your budget to cover other expenses if your income decreases.

8. Have an emergency fund This is a must in case you lose your job or have any unexpected expenses. Try to save up at least between three to six months’ worth of living expenses so that your expenditure is covered.

9. Diversify your Income Don’t put all your eggs in one basket. Having multiple streams of income can really help. If one income source starts to dwindle – or gets eliminated completely – this will provide other sources to fall back on.

10. Diversify your investments In addition to diversifying your income, it’s also important to diversify your investments. Review your investment portfolio and make sure your investments are spread across different industries and even different types of asset classes.

SECURE YOUR FINANCIAL FUTURE

Following these tips will help you secure your financial future and protect yourself from the effects of rising inflation and the cost of living crisis. If you would like to find out more or to discuss your situation, please contact us.

State Pension is still the bedrock of many pensioners’ retirement income

The earnings benchmark of the State Pension triple lock has been temporarily set aside for this year. The Department for Work and Pensions
(DWP) confirmed on 7 September 2021 that the State Pension triple lock rule has not been applied for the current 2022/23 financial year over concerns of the potential costs involved.
It comes after the Office for Budget Responsibility (OBR) said in July last year that pensioners could see their payments rise by as much as 8% due to the guarantee. The triple lock guarantees that pensions grow in line with whichever is highest out of earnings, inflation or 2.5%.

WHAT IS THE TRIPLE LOCK FOR PENSIONS?
The triple lock has been a core commitment of every government budget
since 2010, when it was announced by the Coalition Government made up of the Conservatives and the Liberal Democrats.
It was a response to the fact that the real value of the State Pension had fallen, and it looked to guarantee that this vital state benefit would continue to rise every year.

The ‘triple lock’ refers to the idea that the State Pension rises in line
with the highest of these three measures every year:

• A Flat 2.5% rise
• Average Earnigns growth (measured form may to july each year)
• Inflation (measured in the year from september every year)

This annual rise is applied to the basic State Pension as well as the new State Pension (for people retiring a&er 2016). The government uses it to make sure that people’s retirement bene!ts keep pace with the rising cost of living.

BEDROCK OF MANY PENSIONERS’ RETIREMENT INCOME
Understandably pensioners are disappointed that the triple lock has been removed for this year, as the State Pension is still the bedrock of many pensioners’ retirement income.
Women and those who are self-employed are among those who will be particularly affected by the temporary scrapping of the triple lock, as they are more likely to rely on the State Pension in retirement.
However, it is encouraging that the government hasn’t abandoned its longer- term commitment. The 2.5% minimum rate has been used on a number of occasions, and is having the effect of slowly increasing what people receive in real terms. The long-term trajectory of the State Pension will also be more important to younger people, more than a one-off
hike in line with earnings this year.

WHAT STEPS TO TAKE TO PREPARE FINANCIALLY

Having a baby is one of the most exciting, life-changing events that you’ll ever experience. But along with the joy and happiness that comes with starting a family, there is also the reality of the added costs.

On average in 2021, the total cost of raising a child to the age of 18 now stands at £160,692 for a couple and £193,801 for a lone parent. These numbers aren’t small, which is why it is important to consider your financial planning options before starting a family.

The total cost of raising a child, the report highlights, is the highest it has been since calculations started in 2012. Since 2012, the total cost has risen by 13% for couples and 25% for lone parents. The rise in the last year has been particularly large – 3.6% for couples and 3.3% for lone parents.

Fortunately, there are ways to ease the financial burden and protect your new family.

CREATE A BUDGET

One of the best ways to prepare for the added expenses of having a baby is to create a budget. Track your income and spending so you have a clear idea of where your money is going each month. Then, start setting aside money each month to cover the anticipated costs of having your baby.

If your income is likely to change after the arrival of your baby (for example, if you reduce or stop working) then it may also be a good idea to consider cutting some costs. It can be helpful to sort your expenses into essential and non- essential items so you can find ways to save.

EMERGENCY FUND

Building an emergency fund is a savings account that you can easily access and use in case of unforeseen circumstances. This could help you weather a financial storm that comes your way and keep you from going into debt. Aim to save at least three to six months’ worth of living expenses, or what you can afford, so you have a cushion in case of an unexpected financial emergency.

Remember, this is a pool of money that should only be used during times of financial need, for example, resulting from a job loss or unexpected expenses such as major home or car repairs, illness, etc, that can cause real financial hardship.

FAMILY PROTECTION

This is all about having a financial safety net in place so that your family can remain financially secure should the unthinkable happen. Family protection will typically include life insurance, critical illness cover and income protection.

It is also essential to make a Will that shares your wishes after death. You will need to appoint executors and trustees to administer your estate and ensure it is shared in the way you intended it to be. You can also determine who will be your child’s guardian, should you die before they become adults.

FINANCIAL FOUNDATION

All parents want to give their child the best possible start in life. As a new parent, one of your key priorities is undoubtedly ensuring that your child has everything they need to lead a happy and successful life. Part of this involves setting aside money for their future – whether it be for their education, purchasing a first property or simply establishing a solid financial foundation. It can also teach them valuable lessons about managing their finances.

When it comes to saving and investing, the sooner you begin, the more time the money has to grow. Options may include: Bank/ building society accounts, Junior Individual Savings Accounts(JISAs) and a Junior Self- Invested Personal Pension (JSIPP). No matter how you choose to save or invest for your child’s future, the important thing is that you start now.

TIME TO DISCUSS PREPARING FINANCIALLY FOR YOUR NEW BABY?

When it comes to making the sorts of plans we’ve mentioned above, the help of an expert can be invaluable. Preparing financially for your new baby doesn’t have to be difficult or overwhelming. By following these simple tips, you can ease the financial burden and focus on enjoying this special time with your new bundle of joy. To discuss how we could help, please contact us for more information.

THE VALUE OF INVESTMENTS CAN FALL AS WELL AS RISE AND YOU COULD GET BACK LESS THAN YOU INVEST. IF YOU’RE NOT SURE ABOUT INVESTING, SEEK PROFESSIONAL ADVICE.

HOW TO PROTECT AND GROW YOUR WEALTH OVER TIME

Inflation is one of the most important factors that savers and investors must take into account when making decisions about their money. Although inflation can eat away at the purchasing power of your savings, it can also create opportunities for profit if you invest in assets that are expected to increase in value faster than prices overall.

Inflation is thus a crucial factor to consider when making any decisions about your money. By understanding how it works and its potential impact on your finances, you can make more informed choices about how to protect and grow your wealth over time.

YEARS OF VERY LOW AND STEADY INFLATION

After years of very low and steady inflation, prices are currently moving higher rapidly. In the UK, this is most obvious in the rising cost of energy, fuel and food. And because of the crisis in Ukraine, it doesn’t look like inflationary pressures will ease any time soon.

Oil and gas prices are likely to remain higher for much longer as sanctions against Russia, one of the world’s largest oil and gas exporters, take effect. Food prices are likely to continue to rise too because Russia and Ukraine are big grain suppliers.

MORE OPPORTUNITY TO GROW IN VALUE

For savers, or those in retirement, it’s important to manage savings to help mitigate the impact of inflation. To do this, your money needs to grow in value. Which is where investments can be so valuable as they give your money more opportunity to grow in value over the longer term than cash savings, and importantly to keep pace with, or even beat inflation.

Another way to protect your portfolio from inflation is to invest in assets that generate income. For example, bonds and dividend-paying stocks can provide you with a steady stream of income that can help offset the effects of inflation.

TAKE ADVANTAGE OF INFLATIONARY TRENDS
Finally, you can also take advantage of inflationary trends by investing in assets that are likely to benefit from rising prices. For example, commodities like oil and gas, as we have seen over recent months, tend to do well when inflation is on the rise.

No matter what strategy you use, it’s important to stay diversified and to monitor your investment portfolio closely. By doing so, you’ll be better positioned to weather any potential storms that may arise due to inflation.

IS YOUR MONEY WORKING AS HARD AS IT SHOULD BE?
We take a personal and proactive approach to managing your wealth. Once we’ve understood your requirements, including your timeframes, the amount of risk that you are comfortable with and how much loss you can bear, we’ll tailor an investment portfolio to meet these objectives. To find out more, please contact us.

NEW RESEARCH HIGHLIGHTS THAT 81% AREN’T SEEKING FINANCIAL ADVICE

As more and more people reject the traditional working structure in favour of becoming self-employed, some people could be at risk of financial insecurity as they lose out on employee benefits that offer protection in the present, and financial planning for the future.

New research highlights this group’s vulnerability to financial shocks and the importance of expert financial advice to open up conversations to ensure that all aspects of protection are discussed, and that the right solutions are in place to help create financial peace of mind.

FACING FINANCIAL HARDSHIP

If you are self-employed, you may not have the same safety net as those who are employed by someone else. If you become sick or injured and are unable to work, you could face financial hardship without income protection insurance.

Income protection insurance could help replace your lost income if you are unable to work due to an illness or injury. It can give you peace of mind knowing that you will still be able to meet your financial obligations even if you are unable to work.

SEEKING FINANCIAL ADVICE

Over half (57%) of self-employed workers in the UK rely on personal savings when they are not working, yet a massive 81% aren’t seeking financial advice according to new research[1]. Nearly two-thirds (64%) of those who are self- employed in the UK revealed they are without a regular income, with just one in five (23%) receiving a monthly pay packet.

The research also found that almost half (48%) of self-employed people see their income fluctuate as a result of owning their own business, with a similar proportion (49%) putting this down to being a freelancer, contractor or consultant

VULNERABILITY TO FINANCIAL SHOCKS

As the cost of living rises and private rents and mortgages in the UK increase at the fastest rate in five years, a quarter (24%) of those surveyed said they only had enough money to cover such costs for three months if they were unable to work.

With the research highlighting the group’s vulnerability to financial shocks and the importance of expert financial advice, worryingly one-quarter (24%) say they hadn’t thought about seeking professional advice.

SECURE FINANCIAL PROTECTION

Not being eligible for Statutory Sick Pay (SSP) can prove a real problem for the self-employed and their financial resilience – during the pandemic, a fifth (21%) of all applications to the Test and Trace Support Payment scheme were from this group, according to a Freedom of Information request by The Community Union.

And while many have taken steps to secure financial protection for themselves and their families, 13% of self-employed workers in the UK still don’t have critical illness cover or life insurance.

NOT SURE WHAT YOU NEED?

When you’re self-employed or a contractor, you get the perk of being your own boss, but you wave goodbye to traditional employee benefits like company sick pay. To discuss how we can help protect your future financial wellbeing and to discuss the options available to you, please contact us for more information.